Carter: A Friend Is in Need

Lance indicted for conspiracy

Thomas Bertram Lance started work, after dropping out of the University of Georgia, as a $90-a-month teller at the Calhoun First National Bank, run by his wife's grandfather. Seven years later Bert Lance and his friends bought control of the bank, and the hulking (6 ft. 4 in.) country slicker from Young Harris (pop. 544) helped turn the area into a prosperous carpet center with his high-risk loans to local small businesses. He soon parlayed his bank connections into a paper empire, tried unsuccessfully to succeed his friend Jimmy Carter as Governor of Georgia, took over the National Bank of Georgia and followed Carter to Washington as the President's Budget Director and closest confidant. But last week, a year and a half after being forced to resign his office because of his questionable financial deals, he found himself in the basement of the federal courthouse in Atlanta, holding up a number for a mug shot and waiting to be fingerprinted.

Lance, a federal grand jury charged after more than a year of deliberation, conspired to violate federal banking laws in the course of getting some $20 million in unwarranted loans for himself, family and friends. He is also charged with making false statements in his financial records and willfully misapplying bank funds. The long-expected indictment added no startling revelations to the saga of Lance's financial maneuvering--and it did not in any way directly involve President Carter--but the 71-page document portrayed in relentless detail the foundationless house of credit that Bert built.

Perhaps the most surprising charge is that the "overt acts" that were part of the conspiracy, 218 of which were listed in the 33-count indictment, were allegedly still going on at the end of April.

Lance's activities, and those of Co-Defendants Richard Carr, Thomas Mitchell and H. Jackson Mullins, were not all that complex. While his friend and client Billy Carter was said to be "kiting" checks, Lance was apparently kiting banks. He played the game with a series of unsecured loans, the Government charges, borrowing from one bank to pay off another; his relatives and associates took out more than 383 loans from more than 40 banks. Long-term overdrafts were also used as interest-free loans, the indictment states. In 1975, 21 associates and friends, who held less than 1/2% of the checking accounts at the Calhoun bank, had averaged 55% of the bank's overdrafts. Their various schemes and extensions of credit allegedly led to $500,000 in actual or potential loss to the banks involved.

A typical example, according to the indictment: in June 1974 Co-Defendant Mitchell, a Georgia businessman who acted as Lance's "blind" trustee when Lance became federal Budget Director, had only $97 in his checking account. But he wrote a check for $200,000, payable to Lancelot, a company owned by Lance and his wife LaBelle. The next day Lance and others got another bank to loan Mitchell $100,000 to partially cover the check. A couple of weeks later a third bank made a $100,000 loan to Mitchell. During that period, Mitchell also arranged a $175,000 loan from a bank in Rome, Ga., to cover overdrafts there owed by the Bert Lance for Governor Campaign Committee, but the money was actually used to pay back campaign overdrafts in Calhoun.

Lance's son David was only 19 in September 1974, when Lance was running the Calhoun bank. But his father, the indictment says, "knowingly, willfully, and with intent to injure and defraud the bank" got him an unsecured loan of $45,000, which was "inadequately supported by credit information and collateral." A couple of months later, the indictment charges, LaBelle got a similar $45,000 loan. This was soon after Lance's $1 million gubernatorial campaign. Son David got a $34,530 loan from the bank the following year. Lance's financial statements at the time were "false and misleading," the indictment says. Lance prepared another financial statement in January 1977, the month he became Budget Director, which also failed to note all of his liabilities, according to the indictment.

Nothing in the indictment refers to Lance's most celebrated loans: almost $7 million to the Carter family peanut business. Questions about those loans arose in previous investigations of Lance's finances by the Comptroller of the Currency and the SEC. A special counsel, Paul Curran, was appointed in March to conduct an independent investigation of the Carter family business loans and whether or not that money was improperly used in the Carter campaign.

Lance pleaded not guilty to all charges and called them "totally ridiculous." As reporters tumbled out of the courthouse onto the street, Lance told them: "Y'all be careful. I don't want any of you to get run over. I want this same crowd around when I'm found innocent." Co-Defendant Mitchell claimed the indictment was an act of Yankee malice. Said he: "The War Between the States? They said it was over 100 years ago." Mullins, a former druggist in Calhoun, sounded equally aggrieved: "Apparently, my only crime was being a friend of Bert Lance's and a supporter of Jimmy Carter."

After selling some of his bank investments to a Saudi Arabian entrepreneur and acting as a consultant in finding investment opportunities for oil-rich Middle East millionaires, Lance has been able to maintain much of the high life-style that his edifice of credit once supported. His lawyers might argue that if Lance did break some banking rules, he did so without either fraud or malice, and that little or no actual damage was done to anyone.

According to the law, the prosecution need not prove damage to win a conviction, but any jury that might hear the case will probably be more sympathetic than the Justice Department. Wrote Atlanta Constitution Columnist Bill Shipp: "Bert Lance has about as much chance of being convicted by a jury in north Georgia as I have of winning the Irish sweepstakes. And I never buy a ticket."

This file is automatically generated by a robot program, so viewer discretion is required.